Inventory control

Inventory control

Vishnu Vardhan Reddy.PTVM/2015-029

Department of Animal nutritionCollege of Veterinary Science, TirupatiSri Venkateswara Veterinary University

Inventory

• Inventory is the raw materials procured, work-in-process products and

finished goods that are considered to be the portion of a business's assets

or will be ready for sale.

• Inventory represents one of the most important assets of a business

because the turnover of inventory represents one of the primary sources of

revenue generation for company.

• A well planned and effectively administrated inventory control system is

most important in any modern business operation.

Storage space

• Stores play a vital role in the operation of a company. Stores generally

include raw materials, work in progress and finished goods i.e., the

inventory of a company.

Anderson stated that for new feed plant design storage space provided

should be three times daily usage or one and one half times the shipment

size for each bulk ingredient.

Inventory practices and procedures

• Bin and tank calibration

Each bulk ingredient, in-process and finished product bin or tank must be

carefully calibrated to accurately determine the amount of material that is in

each bin or tank of any given time.

Calibration chart for that specific bin may be referred to determine cubic feet

of material in the bin which provides the pounds of material when multiplied

by the density of the material.

• Liquid tanks are normally calibrated to provided gallons for inch and are

measured for inventory purposes by reporting the depth of the liquid

rather than empty space, which can be converted to weight.

Volume computation

• Volume of a square or a rectangular tankVolume = Width X Length X Height

• Volume of the frustum of a pyramidVolume = H ( B + b + )

• Volume of a cylinderVolume = πhπ = 3.416

• Volume of the frustum of a coneVolume = H ( + + rR )

Physical properties of feed Ingredients

Physical properties of feed ingredients are important to the design as well as

the daily operation of feed plants. Some of the more important physical

properties include: Bulk density, Compaction, Specific density, Coefficient of

fraction and Angle of repose.

Bulk density

The bulk density is the mass per unit volume of that material. Density is easily measured by

weighing the amount of the material needed to fill the specific volume. The common units

of the bulk density are pounds per cubic feet and kilograms per cubic meter.

Procedure:

• Fill the cubic foot box to heaping

• Lift it approximately 6 inches and drop it

• Repeat step 2

• Level the box with a straight edge and

• Weigh and record the net weight of the material(weight of box + material - weight of box)

• The density of a material varies significantly with particle size and

compaction of the material.

• Even different lots of the same material may have different densities.

• Therefore, when accuracy is needed, it is best to measure the density of a

material than to use a value from a table.

• Dry and liquid materials will vary in their weight per cubic foot therefore,

the density of each material must be known.

Feedstuff (kg/dm3)

Rice grains 0.72Rice bran 0.30Wheat 0.73Wheat bran 0.24Maize 0.68Flaked Maize 0.21G.N. Cake 0.60Meat meal 0.64Blood meal 0.43Bone meal 0.83Fish meal 0.56Molasses 1.33Ground limestone 1.14Water 1.00

Density of different feeds

Bulk density conversions:

1 kg = 2.2046226 lbs.

Cubic feet to cubic meter = multiplied by 0.028316847

Cubic meter to cubic feet = multiplied by 35.314667

Specific density

Specific density is the mass per unit volume of a material and is given in

grams per cubic centimeter (g/cc). Unlike bulk density specific density is the

true density of a material because the volume taken up by air in the material

is not included. The specific density of a material is determined by

measuring the specific gravity of the material and converting it to a density.

This is done by taking the specific gravity of the material and dividing by

0.99823.

Specific Density =

Coefficients of frictionIn the movement of materials, the force of friction plays an important role. There are

two different frictional forces that deal with the movement of materials: static and

dynamic.

• The static friction force is the force needed to start movement of a material.

• The dynamic frictional force is the force needed to stop the movement of a material.

• The coefficient of friction increases slightly with an increase in moisture content of

the feedstuffs the coefficient of friction decreases slightly with an increase in

temperature.

Friction measuring apparatus for food grains

Calculation of coefficient of friction• The coefficient of static friction is determined with the use of the below

formula: = tanθ

The coefficient of kinetic friction is determined with the use of the below formula:

= tanθ -

S = Distance travelled in time “t”.

(Analysis of frictional properties of cereal seeds, Zdzisław KaliniewiczDepartment of Heavy Duty Machines and Research Methodology, University of Warmia and Mazury, Oczapowskiego)

The angles of repose• Angle of repose can be simply defined as the maximum angle (α) in degrees at which a

pile of material retains its slope. As the moisture content of a material increases, the

angle of repose also increased nearly linearly.

Compaction• Grains and other feed ingredients compact (pack) in bulk storage. Compaction of bulk

materials in storage is known to occur but the degree of compaction can only be

estimated. Compaction charts are developed and used by fee warehouse division and

others. Such charts may be used as a guide, but there are many factors other than bin

diameter that affect material compaction are

• The material, itself - its bulk density, texture, moisture content, particle size and

shape, etc.

• Depth of the bin or the depth of materials in the bin

• Bin wall material and / or condition - rough concrete, smooth concrete, wood,

smooth steel, corrugated steel, etc.

• Location of the bin In relation to seismic occurrence - for example, materials In a

bin located near the main line or switch yard of a railroad will experience more

settling (compaction) than in one where there are no ground tremors.

• Time in storage

• Relative amount of foreign matter in grain

Compaction chart

Bushels per foot

Bin diameter (feet) % Compaction No Compaction With Compaction

10 4.85 62.83 65.9

12 5.00 90.47 94.9

14 5.30 123.15 129.6

46 5.50 160.84 169.6

18 6.00 203.57 215.2

20 6.70 251.32 268.1

Bushels = A measure of capacity equal to 8 gallons (equivalent to 36.4 litres)

% compaction =

Weights and weight control• An inventory control system is incomplete without accurate scales for receiving and

shipping.

Physical inventories• Any good inventory control programme must include an examination of the

condition of the product and the bin in which it is stored.

Packaged ingredients, suppliers and products• The best procedure for taking physical inventories in the warehouse involves a

three man inventory team of selected, literate employees. • Two persons serve as counters and will give their count and the item to the third

member who repeats the count and item, then records the inventory. • An orderly warehouse makes inventory easier and more accurate.

• Employees must be trained and instructed that items must be stacked with a consistent

number in each stack.

• Space should, be provided around each stack or tier to facilitate inventory

Bulk storage bins:

• A two-man team should be used for inventorying bulk ingredient, in-process, and

finished product bins. One person handles the drop line and the other records the

empty space measurement.

• The team should be provide with a bin chart, a bin measuring tape and plumb bob, an

OSHA approved drop an OSHA (Occupational Safety and Health Administration)

approved flash light and a measuring stick for liquids.

• One center hole for dry material bins of up to 8 ft. in diameter and for

liquid tanks is usually adequate for 'drop line' or measuring stick

measurement and for visual inspection of the bin or tank.

• However In larger diameter bins there should be multiple openings for

more accurate drop line measurements.

• Since stored dry materials tend to peak, cone, or rat hole in bins employees

must be trained to use calculated judgment In the bin level measurement

that they report.

• One inch of shelled maize in a 20-ft diameter round bin will weigh nearly

1200 pounds.

• So missing the average measurement of such a bin can affect the reported

inventory by tons.

• A good method to avoid such errors or to maintain a reasonably consistent

error factor is to have the same person perform bin measurements for all

inventories.

• Surprisingly, that person will become quite accurate.

Bin cleanout reports and records

• It is good procedure to inspect bins when they are reported empty to

determine whether there are material hang ups, signs of insect infestation,

moisture build up (ground and flaked grain bins, for example) and the

general condition of the bin walls, etc.

Inventory Control

Inventory control involves the procurement, care and disposition of materials.

There are three kinds of inventory that are of concern to managers:

• Raw materials,

• In-process or semi-finished goods,

• Finished goods.

If a manager effectively controls these three types of inventory, capital can be

released that may be tied up in unnecessary inventory, production control can

be improved and can protect against obsolescence, deterioration and/or theft.

Inventory control systems

1. The Eyeball System2. Reserve Stock (or Brown Bag) System3. Perpetual Inventory Systems4. Stock Control System

The Eyeball System

• This is the standard inventory control system for the vast majority of small

retail and many small manufacturing operations and is very simple in

application.

• The manager stands in the middle of the store or manufacturing area and

looks around. If he or she happens to notice that some items are out of

stock, they are reordered.

Reserve Stock (or Brown Bag) System

• This approach is much more systematic than the eyeball system.

• It involves keeping a reserve stock of items aside, often literally in a brown

bag placed at the rear of the stock bin or storage area. When the last unit of

open inventory is used, the brown bag of reserve stock is opened and the

new supplies it contains are placed in the bin as open stock.

• At this time, a reorder is immediately placed. If the reserve stock quantity

has been calculated properly, the new shipment should arrive just as the

last of the reserve stock is being used.

Perpetual Inventory Systems

• Various types of perpetual inventory systems include manual, card-

oriented, and computer- operated systems.

• In computer-operated systems, a programmed instruction referred to

commonly as a trigger, automatically transmits an order to the appropriate

vendor once supplies fall below a prescribed level.

Stock Control System

• A stock control system should keep you aware of the quantity of each kind

of ingredient on hand.

• An effective system will provide you with a guide for what, when, and how

much to buy of each type of product.

• It will reduce the number of lost sales resulting from being out of stock of

inggredienhts in popular demand.

Inventory Control Records

• Inventory control records are essential to making buy-and-sell decisions.

• Some companies control their stock by taking physical inventories at

regular intervals, monthly or quarterly.

• Others use a money inventory record that gives a rough idea of what the

inventory may be from day to day in terms of money.

• However, even with this method, an inventory count must be taken

periodically to verify the levels of inventory by item.

Conclusion

• Inventory control is a way of doing business and In the responsibility of

nearly every other function in a company: from the maintenance foreman

who order maintenance supplies to the clerk who buys office supplies, to

the purchasing department and commodity buyer, to the traffic manager,

to the production stall, to the accounting department, to the trucking

department, to the sales department, and so on.

• The economics of inventory control are the economics of doing business.

THANK YOU

Vishnu Vardhan Reddy.PTVM/2015-029